The Eastern and Southern African Trade and Development Bank (TDB) together with the European Investment Bank (EIB), signed a $120 million deal on Monday which focuses on SMEs and climate action facility in Africa.
The fund will be used towards financing the cost of projects by the private sector, including small and medium enterprises, with a special focus on climate action, renewable energy, and energy efficiency.
The agreement was signed at the 9th ACP Summit of Heads of State and Government in Nairobi by EIB Vice President, Ambroise Fayolle, and Admassu Tadesse, TDB Chief Executive, and President.
In Eastern and Southern Africa, SMEs are by far the biggest contributor to employment and account for up to 40 percent of GDPs. This deal is set to close the financing gap of SMEs with the launch of a program.
Commenting on the deal, Tadesse said that TDB is “very pleased to be deepening partnership with EIB.” He added that the multifaceted partnership with EIB will enable TDB step-up in their commitment to delivering triple-bottom-line results in the region.
His colleague Fayolle disclosed that “scaling up climate-related private sector investment is key for climate action.” He went on to say that the new financing “will accelerate investment in renewable energy, energy efficiency and clean transport by businesses in Africa.”
With the universal acceptance of renewable energy as a means to global economic productivity and sustenance, African countries keying into the concept have adopted various types of renewable energy in their societies.
Otherwise known as clean energy, renewable energy brings about massive social, economic and environmental benefits. According to a recent report by the International Renewable Energy Agency (IRENA), if current renewable energy’s share is doubled in the global energy mix, global gross domestic product (GDP) would increase by as much as 1.1 percent, or approximately $1.3 trillion, by 2030.
African countries like Kenya are leveraging on the benefits of clean energy and were recently ranked fifth globally in an annual Bloomberg index which measured investments and opportunities in clean energy.
The East African country’s rise in the global top five was backed by the high contribution of solar, wind and geothermal capacity into the energy mix, which currently accounts for up to 65 percent of the country’s energy sources.
According to the Bloomberg Climate scope report, In 2018, Kenya accounted for over a third of all foreign investment into sub-Saharan Africa with over Ksh 140 billion ($1.4 billion) in clean energy, underlining the country’s position as the Centre of renewable energy in Africa.
With the proposed EIB fund, more companies and SMEs which are clean-energy oriented will emerge leading to additional foreign investment in Africa.
By Treasure Nnabugwu.